Analytics makes every penny count

The most powerful tool in aligning employees to the organization’s strategic priorities is…. THE MONEY!

Organizational Strategy is by design and necessity, a top-down exercise. It’s impossible to involve thousands of employees spread out in disparate continents, time-zones and cultures in order to get their perspective and input, however so valuable it may be. Now, when the time comes for execution, this becomes the biggest obstacle in rallying the troops. Lack of input almost always ensures lack of buy in.

THIS IS WHERE THE MONEY SHOULD COME IN.

Compensation is an interesting animal in large organizations. When the party is in full swing, it gets thrown around without a care in the world. In other places, it’s the holiest cow, irrespective of high or low tide. When the music stops, it is dragged kicking and screaming to the slaughterhouse. From what I’ve seen, some version of this is practiced almost everywhere in the name of salary planning.

It doesn’t have to be this way.

The salary budget should be treated as any other valuable resource and should be given the respect it deserves. One of the fundamental requirements to smartly deploying compensation as a potent weapon in organizational alignment is the ability to measure and analyze key performance drivers. It is critical that all strategic objectives be defined as measurable goals and their relative importance should also be clearly laid out in unambiguous quantitative terms. A robust framework to roll up and roll down the objectives will ensure that accountability gets fixed and firmly establishes a level playing field.

Now, it’s time to get real! The entire salary and incentive budget should be held hostage to progress against these goals and nothing else. This will ensure that what everybody gets or doesn’t get isn’t a matter of conjecture any more. It’s a very simple, straightforward calculation that will make everybody get up and smell the coffee.

Almost always, this will get a responses which sound like “Aw.. it’s easier said than done”…”compensation decisions are too complicated for this to work” or in a lot of cases.. “a lot of our goals can’t be quantified”.

The secret sauce here is the power of analytics. All of the idealistic, theoretical and “too-good-to-be-true” ideas discussed above can be brought to life with data analysis techniques. All goals, underlying factors, priorities, constraints and all other considerations can be modelled in order to arrive at the best possible outcome.

Organizations can now set up robust systems that will illustrate a transparent mechanism of linking rewards to objectives, that will motivate everybody. Nobody gets blamed and professionalism sets in as a wonderful by-product.

It’s time to unlock value. It’s time to make every penny count!

I would love to hear from you on your experience in designing and implementing performance driven compensation plans. We will continue this conversation. WATCH THIS SPACE…

By Karthikeyan Damodaran

The author is a Consulting Services Leader at BRIDGEi2i Analytics Solutions. He can be reached at karthikeyan.damodaran@bridgei2i.com.

About BRIDGEi2i:BRIDGEi2iprovides Business Analytics Solutions to enterprises globally, enabling them to achieve accelerated business impact harnessing the power of data. Our analytics services and technology solutions enable business managers to consume more meaningful information from big data, generate actionable insights from complex business problems and make data driven decisions across pan-enterprise processes to create sustainable business impact. To know more visit www.bridgei2i.com

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The views and opinions expressed in this article are those of the author and do not necessarily reflect the official position or viewpoint of BRIDGEi2i.

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